Morality is a fairly complex subject — so much so, that I would argue that its inclusion in video game decision making is precarious at best. Morality, in a descriptive sense, refers to a code of conduct that defines some actions as good and others as not good. That said, your views on what is considered moral and immoral will likely depend on how you apply the concept yourself. There are those who see "good" and "evil" as universal absolutes to which everyone should be aware, and others who believe that morals are subjective and completely dependent upon the user's nature, nurture, and culture. I won't be so bold as to suggest that one of these two perspectives is better than the other, people far more intelligent than myself have been debating that for centuries, but I did want to illustrate just how complex and obtuse morality is conceptually. This complexity is why I think it's odd that some developers continue to implement non-complex video game mechanics which are predicated on applying morality.
Morality in the real world involves dealing with the occasional gray-areas that exist in between what can be considered "good" and "evil." Is it morally correct to steal a loaf of bread in order to feed the starving? This is a unique context which meshes negative actions with positive outcomes. Your opinion on the matter will depend on whether you're a moral absolutist or relativist, but that's exactly the problem.
Being an ethical person in a video game requires conformity to whatever the game developers see as being moral. Dissent from the morals established by those developers can result in punishment via alignment point loss, a weakening of abilities, and often unintended narrative consequences. While there is nothing wrong with the creators shedding light on their personal world views in most video game genres, many RPGs are supposed to allow for self-expression, world exploration, and moral freedom. The moral systems we've been exposed to in video games are often too inflexible to allow for actual player agency or alternative ways of thinking.
The most common system we seen as of late involves a morality meter. One end of the spectrum is "good" the other is "evil," with the middle representing the grey-areas. It's a mechanic that is usually implemented to add gravity to the actions made by players, but represents an overly absolutistic approach to ethics. The decisions made are painted as "good" or "evil" actions, and they bear weight because developers have assigned good and evil points. There are usually bonuses to being good or evil (i.e. Star Wars: KOTOR's Dark Sided Sith and Light Sided Jedi abilities), but none for being moderate. This leads to many players pushing their character to be more angelic or douchey simply to have more capabilities in-game. These decisions are supposed to be context sensitive, but the element of morality judgement can be forceful enough to make players ignore situational context entirely.
This simplest morality game mechanics have the flaw of rewarding the player if they consistently choose to do good or bad, while inadvertently penalizing a nuanced playthrough where one may choose to be "good" in some circumstances and "evil." Never is this mechanic quite as annoying as it is in Fable III. After leading an uprising to replace your tyrannical brother on the throne, you are informed that a great threat looms on the horizon. The Crawlers have destroyed whole civilizations and have their eyes set on your kingdom. Either you keep the promises you've made with all of your friends and improve quality of life regionally by draining the royal vault, knowing that without war funds everyone in Albion will be slaughtered by the impending threat, or you tax the hell out of everyone in order to save their lives — thereby being seen by the people you saved as an evil tyrant. There is no room to be seen as the necessary evil by your citizens under this system.
To worsen things, these simple systems often have the problem of presenting a single choice near the end of the game that will heavily push you to extreme or the other. Not only does this undermine many of the "good" or "evil" actions up to that point, but, in the case of multiple endings, the fate of your character and the narrative can be decided by one decision. In Jade Empire, for instance, the narrative conclusion and your characterís ending alignment are decided by weather you kill the Water Dragon or not. The same occurs in Baldur's Gate 2, where taking even a single selfish action in the final dungeon's trials instantly makes you Neutral Evil — changing your ending in Throne of Bhaal. While it could be argued that single choices in real life can also bear a monumental impact on morality, it doesn't make sense to be seen as moral or immoral after a single decision when the rest of the game had you acting a different way.
There have been more complex systems which, to varying degrees of success, try to remove the "good" and "evil" elements by making the choices less about those two absolutes and more about different methods of problem solving. The Mass Effect series, for instance, attempted to solve the problem of in-game moral absolutism by allowing you to make individual Paragon or Renegade actions, which do not penalize based on your method of approach. However, the way you could handle decision making was still limited to "being a jerk" vs. "not being an jerk." Another complex morality system is applied in the Shin Megami Tensei series, where choices are based on an Order, Neutral, and Chaos three-way alignment system. Each of these alignments have positives and negatives, which is a more realistic approach, but still doesn't leave much room for context-sensitive decision making.
Morality choices are also often at odds with scripted gameplay sequences and design, leading to the inclusion of multiple pathways which lead to only a handful of possible endings. While this might lead to more replay value, a narrative can lose its impact or even antagonize when just a few situational or dialogue choices drastically changes its conclusion.
I feel as though this concept is too obtuse to be handled the way it has been. Whether it is Light Side vs. Dark Side or Paragon vs. Renegade, the decisions you make in-dialogue and through actions are still being cleanly funneled into one of two boxes. These systems don't adequately allow the player to apply their own morality systems without being penalized for their beliefs or limited in choices. I think we can approach things in a different way. Letís ditch the visible karma meter, stop assigning points to "good" and "bad" decisions, and not let those decisions have a direct impact character development itself. Instead, there should be more options during decisions moment for the story to progress from, without moral bonuses or penalties being applied for those choices. Maybe then we can act morally without having to conform.